A California residential purchase escrow is open and all buyer contingencies have been removed. The buyer now wishes to cancel the transaction. Under California escrow law, what is the correct procedure for the escrow company to cancel escrow and release the buyer's deposit?
Correct Answer
D) The escrow company requires mutual written cancellation instructions signed by both buyer and seller before releasing any funds
Under California escrow law and the terms of the California Residential Purchase Agreement (C.A.R. Form RPA), an escrow is a neutral depository and cannot release funds based on one party's instructions alone. Once all contingencies have been removed, neither party has a unilateral contractual right to cancel. The escrow company requires mutual written cancellation instructions — signed by both buyer and seller — before disbursing any funds. If the parties cannot agree, the funds remain in escrow until the dispute is resolved by mutual agreement, mediation, arbitration, or court order.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Adverse possession is a legal doctrine that allows a person to claim ownership of land by occupying it continuously for a statutory period under specific conditions, without the true owner's permission.
A bargain and sale deed implies that the grantor holds title and possession of the property but does not include warranties against encumbrances or title defects.
The chain of title is the sequential history of all transfers of ownership for a specific property, from the original source (typically a government patent or grant) to the present owner. An unbroken chain is essential for marketable title.
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A non-U.S. resident is selling a California investment property for $900,000. The buyer does not intend to use the property as a personal residence. Under FIRPTA, what is the federal withholding amount the buyer must remit to the IRS?
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A property in Santa Clara County closes on March 20. The annual property tax of $12,000 has not been paid for the current fiscal year (July 1 through June 30). Using a 360-day year and 30-day months, how much property tax will the seller owe at closing?